IOSCO seeks evidence over controversial bond study

IOSCO recently found through a study that there is no evidence of deterioration in corporate bond market liquidity.

The International Organization of Securities Commissions (IOSCO) is looking for comment on its report that says liquidity in corporate bond markets has not deteriorated.

The report examined in detail whether liquidity in the corporate bonds market have declined substantially in recent years.

IOSCO found no evidence to support this theory or that regulatory reform has had any significant effect on the decline of liquidity.

A survey published in July this year carried out by the International Capital Markets Association (ICMA), found 50% of buy-siders agree bond liquidity is deteriorating.

A further 80% said they expect the liquidity to continue deteriorating.

ICMA explained the deterioration is the result of “the complex interplay of monetary policy and financial regulation.”

IOSCO’s report revealed ‘meaningful changes’ to the bond market’s structure, including changes to dealer inventories and electronic trading venues.

The report was challenged by some in the industry due to differences in data collection, scope and consistence.

Therefore, IOSCO is seeking public comment as it undertakes another study in the data used.

It also requested industry participants to put forward any data or analytics, which could be useful for the study. 

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